Globalization Flashcards
What is the globalization of markets?
refers to the merging of historically distinct and separate national markets into one huge global market
What does a “global market” entail?
National markets mergent into one with
- reduced trade barriers
- consumers tastes and preferences are converging
- firms offer the same basic products worldwide
What is the globalization of production?
refers to the sourcing of goods and services from location around the globale
Now businesses can take advantage of the difference in cost and quality production in different places
How has the globalization of production affected businesses?
They can now lower their overall production costs, and improve the quality or functionality of their products
What are the two main drivers of globalization?
Decline in trade and investment barriers:
Technological development: internet, better transport and telecommunication
How has globalization impacted business?
Lower barriers has made the global market accessible, and they now base their production where it is the most profitable
tech change has also made transport easier, lowering costs of transport
global media has diversified consumer preferences
What are the 4 main topics that are debated around globalization?
-World output and trade
- Change in FDI
-Change in MNC
-Change in world order
How has globalization changed world output?
in the 60s, the US accounted for 40% or economic activity, today only 20%
Developing nations has boosted their economic activity, in 2060 they will account for more than 60%
China is the best example of the new trends in economic activity, which has emerged as of the world’s largest economies
How has globalization changed FDI?
In the 60s, 2/3 of FDI flows worldwide came from the US, now only 1/5 - similar trend in other developed countries
FDI flow from other developed countries is the same
China’s FDI flow has gone from 2 billion to 90 Billion
How has globalization changed the nature of MNCs?
There has been a rise in non-US MNCs, relative decline in US supremacy
There as also been in growth in small and medium sized MNCs
What is a TNC
Owneed and managed by two different countries
what is a Global enterprise
Owned and managed AND operates in different countries
What is an MNC?
A MNC is a business that has productive activities in two or more countries
How has globalization changed the world order?
Many former communnists countries in Europe and Asia are now committed to free markets, which has opened up opportunities for international business
China and Latin America has also emegred as economic powerhouses
What does the global economy look like in the 21st century?
the world has become a global economic system, but has brought risks of financial crisis such as the late 90s crisis in south east asia and the 2008 financial crisis in the US
